Google's tax and the Public Accounts Committee for TPS
Tax avoidance is currently high on the agenda in media coverage and the focus is on large multinationals.
This recent Accountancy Age article discusses the Public Accounts Committee hearing which Google and HMRC bosses attended to answer questions on the recent tax deal which has Google paying £130 million in back taxes.
Some things to consider and relate to your studies when reading the article are as follows:
- The focus here is on Corporation Tax but it is worth considering what other taxes Google or other multinationals might be paying
- Employer’s National Insurance contributions on salaries, bonuses and benefits provided to UK employees
- Local rates on business premises for all UK locations
- VAT on purchases
- Media coverage often focuses on the turnover of multinational companies when considering corporation tax paid. You will know from your studies that companies do not pay tax on their turnover but on their TTP (taxable total profits).
- Google are a non-EEA company with a permanent establishment in the UK hence they should be subject to corporation tax on their income in the UK.
- As an international group Google’s tax advisers would need to consider the complex Transfer Pricing Rules covered in your TPS Tax course in Module 10.
- Google’s Head of European Operation was asked questions relating to his personal income. Remember that from a company perspective most employment costs are allowable expenses of the business in calculating the TTP which is chargeable to tax, reducing their Corporation Tax. Based on the current tax and NIC rates, consider whether the tax saving to Google is more or less than the tax paid by the executive on his salary package.